Thanks Dave for the analysis over the past two or so months.
I've thought about the trading volumes for the past hour or so, looked at volumes, looked at average prices, etc. And before anyone gets to the punch line before me, yeah, so what, how much time have you spent?
Here's my conclusion:
There is no conspiracy here! It all comes down to Yorkton. On Nov. 19 the press release states that Yorkton financed 5.7M shares @ $1.75. These warrants, however, are exercisable for common shares at any time before Dec. 31, 1999 or, within 10 days of a BII US public offering (ie a NASDAQ listing). In other words, they have not yet purchased the stock, no need to yet.
OK, so they have, undoubtably with alot of client and maybe institutional help, acquired 5.7M warrants plus an extra 400,000 thrown in - a total of 6.1M warrants. And do not under estimate the help of Yorkton clients and institutional investors in closing the deal.
So, what do you do if you were Yorkton. As has been put forward on this thread, you short. You short the number of shares you have rights to, probably. So, what was Yorkton's net position for November? You guessed it - 5.5M shares. Interesting number, isn't it.
OK, following so far? Agree with me so far? If not, use your mouse and hit NEXT <g>.
OK, so Yorkton is short as much as, but maybe less than 5.5M shares at an average price of $3.05. Where does that leave us? Now the first question is why $3.05? I think it's because its a number that had originally planned as a target and when the stock went from $3.50 back to $2.60 in later November, you know who was selling? Oh yeah, Yorkton comes to mind!
What next? Now, you could drive the price down, say to $2.50, repurchase shares at a profit and attempt to do it all over again. But, if you do that tooo many times, well, maybe this puppy is dead and it ain't coming back! Now, you will have to explain trading activity to the board and why you have the gains and they don't, wouldn't you. Maybe not, only Mr. Godin will be able to tell you later whether he has a close enough relationship to demand such answers.
However, another scenario is as likely. Try this one. Maybe the selling Yorkton has been doing over the past week is truely legitimate, I mean, maybe they had real retail sellers, cashing in, and maybe that accounts for 1 Million shares on the selling side. Maybe, at the same time, they have been buying back their shorts with full knowledge that this puppy is REALLY going to heat up, meaning they can get alot more than they originally planned!
Now, under this scenario, couldn't that partly explain the "box" trading pattern over the past two days. That, and a garbage report from a so-called analyst from a low-tiered brokerage house, that has nothing to win or lose and has shown it with their trading patterns. In fact, maybe Adam will end up at Yorkton one day, maybe? Because, one other thing to add to the equation, if Yorkton is already short 5.5M shares, what;s the chances management would allow more shorting against the same company? Probably not, better to knock the price down and let it heat up later after they've covered their existing shorts.
Also, under this scenario, it means that we can continue to see more trading in the same range until Yorkton closes their shorts, or until there is more demand and the price soars anyway.
I don't want to start a conspiracy theory. I just want to try to explain the market trading of Yorkton. Can anyone add to this? Can anyone modify it based on other knowledge?
Mr. Forthright, before you call me a simpleton, forget it. Maybe I'm right, maybe I'm wrong. Let's just keep all options open. And, Mr. Forthright, if you don't think I'm right, what is your view on trading patterns? What is going on? Not a one liner, a real honest effort to educate us, OK? |
